Congressional Democratic leaders, who are unsatisfied with both the pace of reform among subprime mortgage lenders and the response of the Bush administration to problems in the industry, called Wednesday for the appointment of a “mortgage czar.”
House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., asked President Bush to appoint someone who would “aggressively” help lenders refinance and modify the loans of struggling homeowners who can no longer make payments.
House and Senate leaders faulted the Bush administration for falling short in its efforts to address problems in the mortgage industry that have resulted in thousands of foreclosures of homes purchased with subprime mortgages.
Sen. Christopher Dodd, D-Conn., a presidential hopeful who chairs the Senate banking panel, likened Bush’s reaction to the wave of defaults to the government’s widely criticized response to Hurricane Katrina.
“Regrettably, as with Katrina, the administration’s response has been marked by the same denial, delay, timidity and incompetence,” Dodd said.
Rep. Barney Frank, D-Mass., chairman of the House committee that oversees banking issues, said the House would move to enact “sensible regulation” of mortgage lending because industry officials have not heeded warnings from Congress to help consumers work out loan problems without having to give up their homes.
“They need to do it,” Frank said.
Democratic leaders want Bush to raise the investment caps of Freddie Mac and Fannie Mae, which provide money for residential mortgages.
The two companies have suffered from accounting problems, however, and regulators are awaiting clean audits before letting them buy more mortgages.
The Bush administration has approved a small, temporary increase in the investment cap for Fannie Mae and Freddie Mac, but is tying any permanent or larger increase to regulation overhaul.
The two companies have tried to go around Bush, asking Congress for help in gaining more flexibility in buying mortgages, which they have argued could help bring stability to the mortgage market.
Sen. Charles E. Schumer, D-N.Y., has proposed increasing the cap by 10 percent. Of that increase, 80 percent would be dedicated toward helping people refinance subprime loans.
“If the administration refuses to act soon, ” Schumer said, “this Congress will.”
The Democrats’ plan is expected to meet heavy resistance by Republicans in both the House and Senate.
House Minority Leader Roy Blunt, R-Mo., said he would not support the appointment of a mortgage czar.
“My sense is this problem doesn’t benefit from another layer of bureaucracy,” Blunt said.
